Report shows fewer cash buyers in market

One of the most common questions I’ve been getting lately from members of the public, the media and the real estate profession is about investors and if they are becoming less active in our local housing market.

I addressed this question during the Nevada Housing Forum presented recently by the Lied Institute for Real Estate Studies at UNLV and sponsored by the Nevada Association of Realtors. As I said that day, I’m seeing fewer investors buying homes here in Southern Nevada.

Given the choice, I think most homeowners consider this to be good news and would prefer to see more buyers actually living in the homes they are purchasing.

Determining exactly how many local homebuyers consider themselves to be investors can be an inexact science. One good barometer, however, is to look at how many buyers are paying cash when they buy a home here.

According to the latest statistics from the Greater Las Vegas Association of Realtors, the percentage of local home buyers paying cash is approaching half of what it was at its peak.

GLVAR said 34.3 percent of all local properties sold in September were purchased with cash. That’s up from 32.1 percent in August, but still near a five-year low and well short of the February 2013 peak of 59.5 percent. The percentage of cash buyers remains highest among local condo and townhome buyers, 65.7 percent of whom paid cash for such properties in September.

Though not all cash buyers can be classified as investors, this is still a good indication that fewer investors are buying and more owner-occupants are moving in to homes.

A few years ago, cash buyers dominated our market and accounted for more than half of all existing local home sales month after month. This was tough on many first-time and entry-level home buyers, who were frequently left standing on the sidelines as they sometimes struggled to secure financing and were often outbid and lost out on homes to cash buyers.

At the time, we certainly welcomed and needed these cash buyers. After all, many of them bought homes that had gone through the foreclosure process and would have otherwise been left to sit vacant for long periods of time.

In many, if not most, cases, these cash-paying investors refurbished and rented these homes to willing tenants. At the very least, these investors helped our housing market and our communities by putting people into these properties. Frankly, I don’t know where we’d be without them.

It’s a different story today. Thanks in part to these same investors buying so many local homes at favorable prices during the housing downturn from about 2008 through 2011, prices have bounced back nicely in the past few years. Since bottoming out at a median single-family home price of $118,000 in January 2012, GLVAR has reported local home prices rising almost every month since then. Today, the median single-family local home price is hovering around $200,000.

Of course, that’s still a long way from June 2006, when local home prices reached a height of $315,000. But at least we’re headed in the right direction.

With the price appreciation we’ve had recently, investors have stepped back a bit. Today, there’s much more opportunity for first-time and traditional home buyers needing a mortgage to finance their home to find and buy the home they want.

Please keep those questions coming, sending them to ask@glvar.org so I can answer them in a future column.

Heidi Kasama is the 2014 president of the Greater Las Vegas Association of Realtors (GLVAR) and has been a local Realtor for more than 11 years. GLVAR has more than 11,500 members. Email questions to ask@glvar.org. For more information, visit www.lasvegasrealtor.com.